The Safety Net's Two Parts: Exploring the Association Between Income Transfer Programs and Nonprofit Human Services

• In Event: Strengthening Supports, Identifying Gaps: How Place and Policy Shape Access to Human Services

Abstract

The U.S. social safety net delivers assistance through personal income transfers and through in-kind nonprofit human services (Shapiro 2021). These two components may offset each other, with nonprofits expanding where transfers are weak, or they may follow a "double disadvantage" pattern in which counties with lower transfer spending also have weaker nonprofit capacity. The only national evidence on this question predates the 1996 welfare reform (Bielefeld 2000). Since then, the transfer safety net has shifted substantially, with SNAP and the EITC replacing AFDC as centerpiece programs and service delivery moving increasingly to nonprofits (Hardy et al. 2018; Allard 2017; Grønbjerg 2001). This study asks how personal income transfers are associated with nonprofit human services expenditures at the county level.

Using county-level data on transfer receipts from the Bureau of Economic Analysis and nonprofit human services (NPHS) expenditures from the IRS-990 NCCS Core File, this study estimates OLS regression models for nearly all U.S. counties in 2019, the last stable pre-pandemic year. The dependent variable is logged NPHS expenditures per capita and the independent variable is transfer expenditures per capita, with controls for county demographic, economic, and geographic characteristics and state political characteristics.

In the bivariate model, transfer spending is negatively associated with NPHS expenditures, but this relationship reverses once county characteristics are included. In the fully specified model, one additional dollar of transfers per capita is associated with a 0.2 percent increase in NPHS expenditures per capita (p<.01). Poor counties receive more transfers because more residents qualify, but they also have weaker nonprofit sectors due to less philanthropic wealth and thinner institutional infrastructure. Once these confounders are accounted for, the two parts of the safety net rise and fall together. Results hold across alternative years of analysis (2016 and 2017). The communities most in need of nonprofit human services based on their rates of government transfers are also the least likely to have them.

References: 

 Allard, Scott. 2017. Places in Need: The Changing Geography of Poverty. Russell Sage Foundation. https://www.russellsage.org/publications/places-need.

Bielefeld, Wolfgang. 2000. “Metropolitan Nonprofit Sectors: Findings from NCCS Data.” Nonprofit and Voluntary Sector Quarterly 29 (2): 297–314. https://doi.org/10.1177/0899764000292005.

Grønbjerg, Kirsten A. 2001. “The U.S. Nonprofit Human Service Sector: A Creeping Revolution.” Nonprofit and Voluntary Sector Quarterly 30 (2): 276–97. https://doi.org/10.1177/0899764001302006.

Hardy, Bradley, Timothy Smeeding, and James P. Ziliak. 2018. “The Changing Safety Net for Low Income Parents and Their Children: Structural or Cyclical Changes in Income Support Policy?” Demography 55 (1): 189–221. https://doi.org/10.1007/s13524-017-0642-7.

Shapiro, Shoshana. 2021. “Inequality of the Safety Net: The Rural-Urban Continuum, County-Level Poverty, and Nonprofit Human Services Expenditures.” Social Service Review 95 (4): 652–92. https://doi.org/10.1086/717519.

Authors

• Shoshana Shapiro, University of Michigan Ann Arbor
  Presenting Author

• Scott Allard, University of Washington
  Non-Presenting Co-Author